China faces a tough year in attracting foreign investment

The outlook for foreign investment in China is grim this year, said Shen Danyang, a spokesperson for the country’s Ministry of Commerce, on Tuesday.

"Internationally speaking, the European sovereign debt crisis continues unabated, resulting in a steady decline in Europe’s outbound investment," Shen Danyang said at a regular news conference. "The U.S. government is struggling to revive the country’s manufacturing sector, and has launched a series of campaigns to encourage capital backflow. Other developing countries have strengthened efforts to attract foreign capital."

Shen added that U.S. companies are taking advantage of the European debt crisis to increase investment on the continent, and emerging economies such as India, Brazil, and Russia are becoming a new focus of investment by multinational corporations. All these factors will lead to changes in global foreign direct investment flows.

Domestically speaking, foreign companies are becoming less willing to increase investment in China amid rising labor costs, increasing shortage of land and other resources, and escalating financing problems, said Shen.

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